Laing O'Rourke turnaround reduces losses

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Laing O’Rourke’s accounts for the year to 31st March 2017, overdue since 30th September, are finally filed today and show a loss of £60.6m.

Above: Ray O'Rourke

However, given that it lost £219.9m the previous year, the board of Laing O’Rourke is happy enough and is projecting a return to profit for the current financial year that ends this month.

Excluding exceptional items and joint venture results, Laing O’Rourke recorded underlying profit of £35m in FY 2017 (2016: loss of £82m). This turnaround was driven by a return to profitability in the core UK market.

Total revenue was up 26% in the year to £3,172.5m (2016: £2,513.2m).

Continuing losses from joint ventures of £86.2m were incurred, of which £83.2m was on phase one of the Montreal hospital project in Canada, completed in October 2017.

Laing O’Rourke’s Construction Santé Montréal joint venture with Obrascon Huarte Lain has been replaced for the remaining stage of the Centre Hospitalier de l'Université de Montréal (CHUM) project.

Group chief executive Ray O’Rourke said: “The group has responded strongly to recent challenges, not only by restructuring the UK business, but also through new processes and controls on project selection, operational delivery, digital data and risk and assurance.

“We have set a new strategic mission and are absolutely aligned with the UK government’s Industrial Strategy, which calls for construction to demonstrate productivity in-line with the aviation and automotive engineering sectors by 2025. Indeed, our aim is to outperform that timetable, with our ongoing investments in advanced manufacturing leading a step-change in safety, quality and efficiency.

“The market is already responding to our DfMA 70:60:30 offsite manufacturing capability in a remarkable way, and we have a series of negotiated projects now in our robust and growing global pipeline.

“I take this opportunity to thank our lender group and all of our stakeholders – including clients, subcontractors and supply chain partners – as well as our supporters in government and the media, for their encouragement while we completed this significant transformation.

“It has been a difficult time for our sector, and recent events have only reinforced the importance of Laing O’Rourke’s early actions to redefine the business. Our leadership team across the group has been steadfast and their achievements remarkable.

“We will continue to build on this momentum, backed by recent high-profile project wins, to become the recognised leader for innovation and excellence in the construction industry.”

During the current financial year, to 31st March 2018, Laing O’Rourke has made several disposals, including: on 21st July 2017 it sold its investment property in Canal Harbour Development Company for £27.8m; on 8th September it sold the trade and assets of Bison Manufacturing Limited for £20m; and on 1st February 2018 it sold its subsidiary Explore Investments No. 3 Limited with its Canadian subsidiaries for £33.6m.

FY17 FINANCIAL SUMMARY

FY 2017 (£m)

FY 2016 (£m)

Total revenue

3,172.5

2,513.2

Group revenue

2,934.6

2,353.6

Gross profit

208.4

125.8

Underlying group operating profit/(loss) before exceptional and JV results